The Thai telecoms sector is transforming in a comprehensive way. Auctions were held in late 2015 that will bring new and powerful technology to the market, introduce much-needed competition to the sector and finally end the problematic concession system, which has created uncertainty and may have discouraged some investment. It is not clear yet whether all the players will be able to afford the 4G licences that were auctioned, or whether they will be able to make the capital investments required for successful rollouts (see analysis).

The regulators are also struggling to get some of the basics right, such as number portability, and this will be important as the operators battle for market share. Most of all, the new sector landscape could endanger margins and profits, and some analysts wonder what that means for service. Nevertheless, telecommunications in Thailand have probably changed for good, and for the better.

“Even though one bid winner failed to pay for the licence, all in all, the 4G auction was more successful than the 3G auction, as it helped Thai people understand the benefits of competition in telecoms,” Somkiat Tangkitvanich, president of the Thai Development Research Institute, told OBG. “It also brought a lot of money for the government, which is good. It is good for both consumers and taxpayers.”

From The Telegraph To 4G

The Telegraph Department was founded in Thailand in 1884. A Radio Telegraphy Act was passed in 1914, which was followed by the Telegraph and Telephony Act of 1934. The 1934 Act spelled out the government’s monopoly on all telecommunications services, and it gave the authorities significant power in building infrastructure. Liberalisation began early, with the formation of the state-owned Telephone Organisation of Thailand (TOT) – now known as Telecom of Thailand – separating phone and telegraph services. The state-owned Communications Authority of Thailand (CAT) – now known as CAT Telecom – was formed in 1976 to run the country’s international telecommunications infrastructure.

Because of the structure of the sector and the legal requirement for government ownership of telecoms assets, and because the state monopolies did not have the financial strength needed, mobile concessions began in 1989. The concessions began to expire 2013, and the government initiated spectrum auctions so that service would continue and end the less-than-ideal system in place. However, these were delayed, and the country found itself with a structurally unstable telecoms sector and behind its poorer neighbours in terms of progress.

Thailand finally conducted its 3G auction in 2012, and despite complaints that it had not been competitive enough and about the choppy transition from concessions to licences, the sector came through in good shape and 3G growth has been impressive. At the end of 2015 two 4G auctions were conducted that were extremely successful and highly competitive. Not only were record funds raised, but a new competitor, Jasmine International, entered the market. Industry observers project a period of fast investment, deep discounts and consumer-driven innovation (see analysis). “E-commerce presents huge potential for business growth in the country but is limited by several factors, including speed and coverage, which should be improved following the recent 4G auctions and service rollout,” Nart Liuchareon, CEO of CDG Group, told OBG.

Evolving Sector

Thailand currently has 82.8m mobile connections – among a population of 68m – and 83% are prepaid, according to GSMA Intelligence. Smartphone penetration is at 63.4%, higher than Indonesia’s 38.1% and Malaysia’s 61.4%, and Thais appear to be extremely active users of their mobile terminals. According to vServe, a digital marketing agency, Thais spend an average of 160 minutes per day on their smartphones, the second-highest level of usage in the region. This is compared to the 187 minutes in Malaysia, 140 minutes in the Philippines and 129 minutes in Indonesia spent per day on smartphones.

It is a fast-changing sector and services provided have been shifting for some time, with the voice to non-voice ratio climbing from 15.47% in 2008 to 122.83% in the fourth quarter of 2015. Prices have been falling dramatically as well. Revenue per minute has dropped from BT0.60 ($0.018) in 2008 to a low of BT0.38 ($0.011) at the end of 2014 (though it has risen since then to BT0.44, or $0.013).

True has the highest revenues per minute at BT0.49 ($0.015). That compares with BT0.38 ($0.011) for Advanced Info Service (AIS) and BT0.45 ($0.013) for Total Access Communication (DTAC). Average revenue per user for the sector increased significantly between 2014 and 2015, when the blended rate rose from BT192 ($5.78) per month to BT220 ($6.62). However, this rise may be a one-off due to the reduction in subscriber numbers resulting from mandatory SIM registration; generally the sectoral trend has been down.

True has done an impressive job of increasing market share. Its total rose from 1.32% in 2002 to 22.14% in the fourth quarter of 2015, while AIS’s share dropped from 65.32% to 45.46% and DTAC’s dropped from 33.36% to 29.56% during the same period. True’s market share peaked at 25.12% in 2011, according to National Broadcasting and Telecommunications Commission (NBTC) figures.

Smartphone Boom

In 2015 smartphone sales growth was 47%, although International Data Corporation, a market intelligence firm, is anticipating slow smartphone growth for Thailand in 2016, with forecasted sales flat or down. The weak economy and early adoption of 4G are factors, as is the fact that half the country’s population already have smartphones and the market is quite mature.

In early 2016 there were signs that smartphone prices were beginning to weaken. Some manufacturers – such as HTC and Xiaomi – were choosing not to attend the Thailand Mobile Expo, while those that did were indicating a slippage. Samsung said it had reduced the price of its S6 model from BT23,900 ($719) to BT20,500 ($617). TrueMove – True’s mobile operator – said that it would be offering a 4G phone for BT1990 ($57.19).

Smartphone manufacturers said, however, that they were still optimistic about demand, as users have tended to replace their phones every two years or so in the past. Some companies are investing significantly in expansion. ZTE, a Chinese smartphone manufacturer, is planning to spend $14m in the country and open 20 shops, while Huawei is planning to spend BT500m ($15.1m) to increase its sales to 15m devices in 2016.

There are currently 32 smartphone brands available in Thailand, and of those only 15-20 are expected to survive through 2016. It is estimated that Apple and Samsung will have a combined market share of 60% in the segment in 2016.

Infrastructure Funds

Operators have been working to strengthen their balance sheets ahead of the need for major 4G-related capital expenditures. In June 2014 True agreed to sell an 18% stake to China Mobile for BT28.6bn ($860.1m). The company undertook the sale in order to cut debt and gain technology in advance of the country’s 4G bidding round. China Mobile was granted three seats on the expanded 18-member board.

One of the major factors in the development of the market is infrastructure. Base transceiver stations (BTSs) are expensive to install and maintain, and require constant upgrading. According to NBTC legislation, BTSs must be shared, but the authorities have not been successful in enforcing the rule. At the same time, infrastructure is potentially profitable, as the assets can provide good, steady cash flow to the owners. As a result, Thai telecoms companies have been selling off their tower assets to raise capital, while holding stakes in them to benefit from money generated.

In 2014 True listed its tower and fibre assets as True Telecommunications Growth Infrastructure Fund (TRUEGIF) in a $1.8bn transaction. In early 2015 the company sold additional assets to the fund, which involved 350 towers and 8000 km of fibre optics estimated to be worth BT14bn ($421.4m). As of November 2015 TRUEGIF, which was renamed the Digital Infrastructure Fund, had a total of 12,183 towers and 60,343 km of fibre optic cable located in all 77 provinces. The fund is considering adding 7500 towers with CAT, giving CAT equity in the listed vehicle.

In late 2014 DTAC agreed to lease 115 towers from TRUEGIF in order to expand 3G services. The three-year, BT2bn ($60.2m) deal involved assets to be used for the company’s 2.1 GHz service and DTAC said that it may lease more towers in the future. CAT leased 4360 towers from the fund, and in August 2015 DTAC and AIS agreed to share 2000 towers.

In February 2015 Jasmine Broadband Infrastructure Fund raised $1.7bn in an initial public offering. In the transaction the fund said it would be buying 800,000 km of optic fibre cable from Triple T Broadband, a subsidiary of Jasmine International. The fund is one-third owned by Jasmine International, and by 2018 another 180,000 km will be transferred. The assets are then leased back to Triple T or leased to other companies in need of fibre-optic capacity.


Build-transfer-operate (BTO) deals were set up between the operators and the owners of infrastructure – CAT and TOT – and these 25-27-year agreements, signed in the late 1980s and 1990s, have been coming to an end.

The AIS GSM-900 frequency band concession from TOT expired in September 2015, although the company was allowed to run down its network and is expected to continue offering the service through early 2016. True and DPC, an AIS subsidiary, were also allowed to run their services through early 2016. DTAC’s concession at 1800 MHz ends in 2018 and the company expects to have all its users transferred over to another service by then.

The NBTC has said that the 1.5 GHz band will be re-issued in the future for mobile phone service – it is currently being used by TOT and Chevron – and that it will take four years to complete. A total of 11 countries backed the international standardisation of the 1.5 GHz frequency at the 2015 World Radio-communication Conference in Geneva.

CAT will be transforming its 3G 850-MHz network into a 4G network. The upgrade will be financed and carried out by TrueMove’s subsidiary, BFKT, and TrueMove will be able rent up to 80% of the network’s capacity. The licence for the 850 MHz spectrum expires in 2025 and TrueMove hopes to have the service available by the third quarter of 2016.

In late 2015 a Thai court ruled that DTAC can continue to rollout 2.1 GHz equipment on its base stations. This right had been disputed due to the terms of the BTO agreement with CAT.

Tesco Lotus – a hypermarket chain – and CAT agreed in 2015 to establish a mobile virtual network operator (MVNO) joint venture, with each holding 50% equity. The latter agreed to lease the 850 MHz spectrum to the retailer, while Tesco Lotus will distribute SIM cards. The venture is scheduled to start in 2016 and run through the end of CAT’s licence in 2025. TOT currently has three MVNO partners.

Number Portability

Number portability was introduced in 2010, but was delayed a number of times. Once operational, the transfer system was slow due to limited capacity and the unwillingness of some players to approve an increase in the capacity. In 2016 six of the country’s carriers were fined for number portability violations. According to the NBTC, these companies – which included AIS and its subsidiary AWN, DTAC and subsidiary DTAC TriNet Network, and TrueMove and subsidiary TrueMove H Universal Communication – had been automatically transferring their customers to their 2.1 GHz networks. Under sector rules, they are supposed to put the number into a clearing house first so the customer can choose their preferred carrier. The regulator threatened to apply higher penalties for these violations – equal to 0.1% of daily revenues rather than the usual BT60,000 ($1810) per day.

DTAC and AIS accused True of taking their customers in a manner that contravened the rules. True had been using 7-Eleven, a related company, to sign up customers from other networks. DTAC and AIS complained, saying that by undertaking paperless transactions the company was not following proper procedure, illegally blocking numbers and interfering in their business. The NBTC, however, concluded that by using digital signatures the company was not in violation and had done nothing wrong.

The NBTC has also received complaints about delays in the transfer of numbers from one carrier to another. In early February 2016 more than 100,000 subscribers were reportedly unable to make the switch and more than 1000 filed complaints in a five-day period. The NBTC said that about 200,000 subscribers were queued for transfer.

In addition to the high costs of the 4G rollout, operators are facing other headwinds, such as paying for equipment in dollars, which have become more expensive over time – the baht fell from 32.5 to 35.5 to the dollar from March 2015 to March 2016. In early 2016 AIS warned that its 2016 earnings before interest, taxes, depreciation and amortisation would be down by about 17% due to capital expenditures and the subsidisation of handsets.

Marketing and sales expenses were up for True in the third quarter of 2015, as it rolled out new networks, though its revenues experienced positive momentum. The company earned BT1.1bn ($33.1m) compared a loss of BT2.64bn ($79.5m) a year earlier – its fourth consecutive quarter of profits. The company also managed to report a profit in 2014, its first in three years. It has been moving between profits and losses for some time as it has tried to balance heavy debt payments with a growing market and the need for investment.

Foreign Investment

Telecoms in Thailand are regulated by the NBTC and the Ministry of Information and Communications Technology. Foreign investors are limited to owning 50% of a facilities-based carrier, though they can wholly own telecoms companies operating on a resale basis. The foreign dominance notification of 2012 made it clear that non-Thais are not permitted to control communications companies, whether through shareholding or voting control. While the notification was seen as violating the country’s international commitments, it was made a voluntary requirement for firms bidding in spectrum auctions.

DTAC has faced questions about its structure, both in terms of ownership and control, because of the major stake held by Norway’s Telenor. In 2012 it changed its shareholding structure to reduce the company’s headline ownership to under 50%. However, Telenor still owns more than half the company’s equity, albeit in a way in which it does not have control of the Thai entity. The company has been facing some trouble locally and in 2014 Telenor apologised after it said that the government had forced it to temporarily shut down Facebook. DTAC also failed to win a 4G licence. Thailand remains Telenor’s most lucrative market, according to a 2016 Bangkok Post article, and the company will stay and continue to invest despite setbacks. The CEO of Telenor said that Thais spend six to eight hours a day on their devices, a level not seen in other countries.

Meanwhile, AIS is 23% owned by Singapore Telecom, while Singapore’s Temasek Holdings indirectly has a 40.5% stake in AIS through a large minority investment in Intouch Holdings.


In 2014 the NBTC approved draft regulations related to call quality. Under the new rules, call completion would have to be 90% both in-network and out-of-network, and the regulator would monitor calls for more hours. The NBTC also reduced the threshold for monthly billing errors from 2% of the total to 0.3% and called for wait times at call centres to be a maximum of 60 seconds from the beginning of the automated response. Earlier the NBTC had called for an 85% completion rate nationwide, rather than 85% as an average for the entire country. It is also concerned about slow data speeds and poor voice quality over networks due to the heavy promotion of new services.

Thailand has been on a push to get all SIM cards registered. The NBTC had set a deadline of July 31, 2015, and held to it. It had originally allowed for a one-month extension of the deadline, but because of the Bangkok Erawan bombing in August 2015 it cancelled the extension and called for an immediate disabling of unregistered SIMs. Although the NBTC indicated that more than 81% of all prepaid SIMS were already registered by the deadline, approximately 11m unused accounts were culled.


The Thai telecom market is changing quickly. 4G has been introduced and a new player may now be competing, bringing the total number of major operators to four. In the short-term, telecoms must pay for their spectrum, and going out they will be developing their networks and building their customer bases. This is sure to be a challenge in terms of fund-raising and profitability, and it seems that creative solutions in terms of infrastructure sharing and financing are on the cards.

The regulators will certainly be busy as companies fight for market share and customers. Throughout the process consumers will benefit from the competition. The main question remaining is whether investment and service quality levels can be maintained in the face of falling margins, and whether competition can be maintained over the long term.